The Hong Kong Monetary Authority published the record of discussion of the Exchange Fund Advisory Committee Currency Board Sub-Committee meeting held on 2 July 2025, alongside a report on Currency Board operations covering 17 April 2025 to 20 June 2025. During the review period, the Hong Kong dollar traded between 7.7500 and 7.8499 against the US dollar, with the strong-side Convertibility Undertaking triggered four times in early May and the HKMA selling HKD 129.40 billion, lifting the Aggregate Balance to around HKD 174 billion. The Sub-Committee noted that Hong Kong dollar exchange and interbank markets continued to operate in a smooth and orderly manner, with no abnormality in the use of the Discount Window. With Hong Kong dollar funding more abundant after the Convertibility Undertaking operations, Hong Kong dollar interbank rates softened, while a widened negative HKD-USD interest rate spread supported carry trade activity and contributed to the exchange rate easing to levels close to the weak-side Convertibility Undertaking in June. The Monetary Base rose to HKD 2,125.03 billion by the end of the review period, and all changes were fully matched by changes in foreign reserves in line with Currency Board principles. On risks, the Sub-Committee pointed to global market volatility linked to US tariff announcements and fiscal sustainability concerns, the potential for weaker Asian growth and market pressure amid tariff uncertainty, Mainland China policy easing measures announced in May, and a Hong Kong outlook still affected by tariff-related uncertainty despite some stabilisation in housing market sentiment and continued challenges in commercial real estate due to high vacancy. The Sub-Committee also reviewed a paper examining the relationship between Hong Kong dollar interbank liquidity and interbank interest rates.
Hong Kong Monetary Authority 2025-08-13
Hong Kong Monetary Authority records four strong-side Convertibility Undertaking triggers and HKD 129.40 billion Hong Kong dollar sales
The Hong Kong Monetary Authority released the Exchange Fund Advisory Committee Currency Board Sub-Committee meeting record and a report on Currency Board operations from 17 April to 20 June 2025. The Hong Kong dollar traded between 7.7500 and 7.8499 against the US dollar, with the strong-side Convertibility Undertaking triggered four times, leading to HKD 129.40 billion sales and an Aggregate Balance increase to HKD 174 billion. The Sub-Committee noted smooth market operations, softened interbank rates, and highlighted risks from global market volatility, US tariffs, and Mainland China policy easing.